Illinois vs Indiana Take-Home Pay Showdown
VSDetailed comparison of tax rates, cost of living, and quality of life
📌 The effective difference between 3.23% and 4.95% amounts to roughly $1,462 yearly on $85,000. Illinois compensates with affordable housing. While Indiana wins on pure numbers, Illinois attracts those valuing housing costs over tax savings.
Tax rates tell an interesting story when comparing Illinois and Indiana: 4.95% versus 3.23%. Someone earning $85,000 sees about $1,462 annual variance. Whether that tips the scales depends on how much weight you give to take-home pay versus other factors.
🔑 Key Differences
- **State income tax**: Illinois at 4.95% vs Indiana at 3.23%
- **Annual savings** (on $85,000): Indiana saves you ~$1,462
- **Tax system**: Both use progressive brackets
- **Deductions**: Standard federal deductions apply, state variations exist
- **Local taxes**: Check your specific county/city as rates vary within states
Tax Comparison
| Tax Type | Illinois | Indiana |
|---|---|---|
| State Income Tax | 4.95% | 3.23% |
| 💰 On $40,000 Salary |
State Tax: $1,980
Take Home: $38,020
|
State Tax: $1,292
Take Home: $38,708
+$688
|
| 💰 On $60,000 Salary |
State Tax: $2,970
Take Home: $57,030
|
State Tax: $1,938
Take Home: $58,062
+$1,032
|
| 💰 On $100,000 Salary |
State Tax: $4,950
Take Home: $95,050
|
State Tax: $3,230
Take Home: $96,770
+$1,720
|
| Cost of Living | Illinois costs split dramatically between Chicago and downstate. Chicago proper commands high prices - rent for decent apartments often runs $1,500-2,500, with home prices in desirable neighborhoods exceeding $400,000. Suburbs provide more moderate housing but property taxes can reach $8,000-12,000 annually even for modest homes. Downstate cities like Springfield, Champaign, and Rockford offer genuine Midwest affordability with housing costs 40-60% below Chicago levels. Sales tax reaches 10.25% in Chicago, among the nation's highest. Utilities cost more during brutal winters. The cost division means identical salaries deliver vastly different lifestyles depending on location within Illinois. | Indiana delivers exceptional value. Indianapolis offers genuine metropolitan amenities - sports, culture, employment diversity - while maintaining housing costs 40-50% below comparable coastal cities. Quality homes in good neighborhoods often sell for $200,000-300,000. Fort Wayne, South Bend, and Evansville provide even greater affordability. Property taxes stay moderate. Rent, groceries, and services all cost substantially less than high-cost states. The combination of low taxes and affordable living means even moderate salaries support comfortable lifestyles - a stark contrast to expensive metros where six-figure incomes struggle to cover basic needs. |
Pros & Cons
Illinois
✓ Advantages
- Flat 4.95% state income tax is simple and predictable
- Strong job market in Chicago across multiple industries
- Central US location provides excellent transportation access
- Downstate areas offer affordable cost of living
- Major universities and research institutions
⚠ Considerations
- Property taxes among highest nationally, especially near Chicago
- State faces significant financial challenges
- Sales tax reaches 10.25% in Chicago
- Cold winters with substantial heating costs
- Chicago's high costs offset lower expenses elsewhere
Indiana
✓ Advantages
- Very low flat state income tax (3.15%)
- Extremely affordable cost of living
- Strong manufacturing and logistics sectors
- Central US location excellent for transportation
- Lower housing costs than national average
⚠ Considerations
- Some counties add local income tax
- Cold winters with heating costs
- Limited public transportation
- Some areas experiencing population decline
- Sales tax at 7%
Bottom Line
Indiana saves you roughly $1,462 annually at $85,000, which adds up over time. Illinois keeps drawing people despite the tax premium, largely due to affordable housing. You'll find urban professionals gravitating toward Indiana, while first-time buyers often decide Illinois's advantages justify the cost.📢 Share This Comparison
Help others make informed decisions about their paycheck